This is MTN's second tryst with Bharti Airtel. The two firms had entered into talks for a deal exactly about a year ago. That time the talks failed as MTN proposed Bharti become its subsidiary, which was not acceptable to the Indian telco major. After those talks failed, Anil Ambani's Reliance Communications (RCom) swooped in and entered into an exclusive period of talks with MTN, Africa's largest telecom firm.

May 6, 2008 -  Bharti Airtel and MTN announce that they are in "exploratory" talks for a potential deal. The two companies start discussing various deal structures. 

May 16, 2008 - The two come to an in-principle agreement on 16th May. The agreed term sheet is presented to the MTN Board on 21st of May, who propose a different structure.

May 26, 2008 - Bharti informs exchanges that its talks with MTN have failed. MTN proposed a different structure where Bharti was to become a subsidiary of MTN. Bharti said in its statement then that it believes "that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity."

It also added that, "Bharti's vision of transforming itself from a home grown Indian Company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti." 

May 6, 2008 -  RCom and MTN enter into a 45-day exclusivity agreement with MTN for possible alliance.

July 19,2008 - The talks between RCom and MTN also fail, but due to different reasons. While Anil Ambani had no issues with RCom becoming a subsidiary of MTN, his feud with his brother Mukesh Ambani played a spoiler. Mukesh Ambani's Reliance Industries started arbitration proceedings against Reliance  Communications, challenging Anil’s right to sell his controlling shareholding to MTN. RCom and MTN said that legal and regulatory “issues” prevented the deal from happening.

Once Bitten, Twice Shy?

Bharti has clearly stated in its release that "the discussions are at an early stage and may or may not lead to any transaction." But a lot has changed since May last year, especially in the post-Lehman Brothers era. But a third party may show an interest in MTN, which is the largest players in Africa, the most unpenetrated markets. Western players like Vodafone, whose domestic markets have saturated, have been said to be interested in MTN. Players like China Mobile have

also been viewed as potential suitors.

Also questions were raised last time if the deal would breach India's foreign direct investment (FDI) norms. Bharti Telecom holds a 45.3% stake in Bharti Airtel, while Pastel (a SingTel Group company), holds 15.6% stake. SingTel, Southeast Asia's largest phone company, also holds around 30% stake in Bharti Telecom, which gives it more than 30% stake Bharti Airtel. Bharti will have to carefully clear the FDI hurdle.

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